TAMPA, Fla. — “This is going to affect individuals and it has been affecting individuals in a pretty significant way for the past two years or so,” said Dr. Michael Snipes, Instructor of Economics at USF Sarasota-Manatee.
This historic inflation is causing pretty significant impacts on consumers.
“The main effect that people are going to see is just a decrease in their purchasing power. Especially if it’s this persistent long-term thing kind of like we’re seeing right now. That’s something that’s seriously going to impact the economy,” said Snipes.
Economists say ongoing supply chain issues, the COVID-19 pandemic, labor shortages, a lack of spending at the beginning of the pandemic, and pent-up demand are all contributing factors to the surging prices.
“Here locally in Florida and especially in the Tampa Bay area one of the things that we’re seeing is that we never really completely shut down. So we had a lot of people coming from out of state for vacations, people coming in here, and moving here, buying new houses. When a lot of the country was shut down people were still coming in,” said Snipes.
Experts say that’s having a big impact on local price hikes.
“We have people coming in from out of state and those people tend to be higher income. That’s going to put even more localized pressure on prices than the rest of the country,” said Snipes.
People are paying more for everything right now from groceries to cars. Companies are passing along the costs of more expensive raw materials and supply chain delays.
Economists say this inflation situation is unusual.
“It normally doesn’t happen for quite as long as we’ve seen it. Inflation tends to be around 2 or 3%…. The last number I saw was about 8%, 8 or 9% for the Tampa Bay area and that’s pretty high, that’s abnormally high,” said Snipes.
On a micro level, this means people are stretching their dollars, having to pay more for the same products.
It’s making it harder on consumers who live paycheck to paycheck and are forced to absorb the extra costs.
On a macro level, the price hikes can have some pretty serious impacts on the entire economy.
“Consumer spending represents on average roughly about 70% of the economy. So when we’ve got people who are experiencing job loss, or are out of the economy, or a decrease in income, couple that with the increases in prices that’s really going to put a hurt and pinch on people’s ability to buy things, pay rent, pay bills for childcare all of these things,” said Snipes.
While it’s hard to make a financial forecast to predict when exactly prices will drop, experts say this can’t last forever, although it will likely still go on for a while.
“I would expect probably during summer vacations as we start to get more people vaccinated and we start to get things more under control people start going on vacations, then things might start to stabilize a little bit,” said Snipes.
Economists say this has been the sharpest increase in prices since 1982.